Since it is notoriously difficult to educate Obamaphiles, I’m guessing that he (and others) need some supplementary material.

How about the words of a key aide to Franklin Delano Roosevelt? Would that be considered a legitimate source? One would think so, which means this excerpt from a 2007 book review (the same statement was also cited by PBS) is rather revealing.

FDR aide Rexford Tugwell would claim in a 1974 interview that “practically the whole New Deal was extrapolated from programs that Hoover started.”

The fact that Hoover and Roosevelt were two peas in a big-government pod may be of interest to economic historians, but the real lesson is that interventiondidn’t work for either one of them. That’s what Andrew Sullivan and others need to learn. But since people like that probably won’t listen to me, maybe they’ll be more willing to accept the confession of Roosevelt’s Treasury Secretary.

FDR’s Treasury Secretary, Henry Morgenthau, wrote in his diary: “We have tried spending money. We are spending more than we have ever spent before and it does not work. … We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot!”

Even though Morgenthau wrote in his diary that the federal government was spending more than it ever spent (he ignores spending during the Civil War and WWI as a proportion of GDP at those times), it wasn’t really very much. This CHART shows that the total federal spending during the 1931 fiscal year was a whopping 4.1 billion dollars. That’s equivalent to about 54 billion in today’s fiat currency.

The problem was that the federal government did not spend anywhere near enough to jump start the economy during the 1930s. Only the massive spending during WWII was able to bring the economy back to life. And our economy at that time was mainly industrial not selling each other fruit, etc.

Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment. It is the proper sphere of government to create and enforce a framework of law that prohibits force and fraud. But it must refrain from specific economic interventions. Government’s main economic function is to encourage and preserve a free market. When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: “Yes, stand a little less between me and the sun.” It is what every citizen is entitled to ask of his government.
–Henry Hazlitt

@Art R. As if building thousands tanks, planes, and bombs, shipping them overseas, and blowing them up improved anyone’s quality of life. Sure, it increased GDP, but GDP is almost meaningless because the increase was almost entirely in weapons and it ignores quality of life. If World War II ended the Great Depression, all Obama would have to do now is build a few aircraft carriers, load them up with brand new tanks and planes, and then sink them. Then we’d be richer than ever.

It is true about the spending that Hoover raised it, but his greatest damage was the pressuring of industry to keep wages high, which they did, by layoffing massive numbers. This lasted through 1931, the end of that caused unemployment to hit rock bottom. The tariff was another thing– that would put pressure on industry to compete and not acquiesce so easily in high wages. I also suspect it was not JUST the spending that Roosevelt did but the whole unpredictability by his changing intrusive schemes forced investment to pull back.

And I think it is equally important to debunk the idea that WWII ended the Depression, normal recovery and the pullback of military life.

History means nothing to Progressives. They are arrogant and egotistical to think they they will do it the right way this time. Conservatives must stand strong to defeat these progressives once and for all.

The problem is not how much money they spent, it is how it was spent and what the results, or lack of results of that spending are. There are many parallels to the current economic crisis and The Great Depression, but it is obvious we failed to understand what worked and what didn’t back then, just as we still can’t agree in what will work or not work now.
As always, we need to follow the money. The problem is never that there is not enough money, it is a matter of where that money is being hoarded and where the cash is stagnating. How to get that money flowing again is the question, and apparently letting those with money hold onto it and letting those without it go without is not a recipe for success.
Companies do not create jobs, demand creates jobs. You can have the healthiest and wealthiest company in the world, but if no one is buying, the company must lay off its workforce until demand picks up again. They could not create jobs even if they wanted to.
Back in the depression the biggest problem was deflation of food prices and the bankruptcies of farmers which sent them into an endless search for work that did not exist for them. It was not until the government employed them to fight in the war or work producing food and materials for the war effort that the depression ended in the hearts of the American people, and victory in the war brought back consumer confidence and willingness to invest.
Herbert Hoover did too little, and what he did do was in the wrong direction.
Just think of how much of what was produced by the US was consumed by the war, imagine if the US could have kept that production and innovation at home. We have the same situation now, much of what the US produces is consumed by war, imagine if we could keep that production and innovation at home.

Demand is created by consumers, who demand things because they have the cash to demand them, because a company hired them and paid them to do something, so the company created the demand. If the company isn’t there to hire people, then the money people have is the phoney money printed by the government, which may have some small impact but not near as much as when companies hire people. The WPA and its fellows couldn’t get us out of the depression because the money went from the gov’t printing press into people’s hands; when the gov’t started paying companies to manufacture products some of the demand returned. I don’t know how you can say Hoover didn’t do enough, with the implication that FDR did, when the fact is that all the programs FDR created did zilch to get us out of the Depression.

The leftists do not acknowledge their faults when they face consequences contrary to their fixed vision. This is a rare instance of honesty, “We have tried spending money. We are spending more than we have ever spent before and it does not work. … We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot!”

But the solution is not trying to make them understand but just to keep working in right direction.

“The problem was that the federal government did not spend anywhere near enough to jump start the economy during the 1930s. Only the massive spending during WWII was able to bring the economy back to life.”

Wow. Really? The problem was the state didn’t spend ENOUGH pre-WWII? You don’t possibly think the massive manufacturing AFTER WWII where the US was pretty much the only supplier had anything to do with the economy coming back to life? You want to recreate the booming economy of the post war years, the solutions isn’t to recreate the great society, or to jack taxes up to 90% or to start a huge war, but to somehow talk the rest of the planet into buying all their manufactured items from just us. Good luck with that.

[…] Great Depression, we could use a man like Warren Harding again. Hoover, he reminded up, citing Dan Mitchell and others . . . increased government spending 47 percent in his one term, raised taxes, and […]

I know who Morgenthau was. What I also know is that what he said was factually incorrect. What did he say, quoted by the author above?

“I say after eight years of this Administration we have just as much unemployment as when we started[.]”

Is that true? No, it is not. It is not even close to true. To prove Morgenthau was simply incorrect I linked to a published economics paper which graphed unemployment rates for the 8 years in question. Clearly, Morgenthau was wrong:

For those who can’t be bothered to follow the link to the graph and paper which shows that Morgenthau was factually incorrect in his statement, it looks as if the official unemployment rate went from 24 to 14% during FDR’s first 8 years and the adjusted rate went from 23 to 10%.

For someone, even the Treasury Secretary of the United States, like Morgenthau, who helped draft the New Deal legislation, to say that 23% unemployment is just as much as 10% is factually wrong.

Well, you missed the spike in 1938 when the rate jumped back up to 19% official, leaving it only 5 points or so from its peak. You also are taking him quite literally. You can do that if you want, but I think it misses the point. The emotional impact, the spiritualy impact, of all that unemployment would have been devestating, especially as it rose again in 1938.
All that federal spending was supposed to eliminate the massive unemployment, but it didn’t. Furthermore, WPA employed 8.5 million people at its peak in 1938, and while I suppose the families of those 8.5 million felt like it was a job, it was a job derived from the borrowing of the federal government, not from production.
But the real point is that when you compare the Great Depression with other depressions (1920, for instance), you see that these other depressions last 2 years or less without government intervention, whereas even when the economy was recovering in the 1930s, it was recovering at historically slow rates, somewhat like our current “recovery.”
As for Hoover, part of what exacerbated the unemployment problem in the Great Depression was Hoover’s insistence on high wages. In past recessions and depressions, employers lowered wages but kept employees. In 1929, 1930, 1931, employers kept wages high but shed employees. Wage rates didn’t begin to decline until well into 1931.
Finally, the number of unemployed workers declined by 7,050,000 between 1940 and 1943, but the number in military service rose by 8,590,000. One could almost argue that we didn’t really recover from the Depression until after the death of FDR. Unfortunately, his policies live with us, and as they are being embellished by our current president, we can probably expect the current 9% unemployment to be the “new normal” for at least a couple more years.

[…] whose evil had to be undone by the New Deal, Hoover was a big-government interventionist whose work laid the foundations for FDR’s programs, and those programs lengthened the Great Depression by seven years. […]

[…] that being right required any keen insight. Keynesian policies failed for Hoover and Roosevelt in the 1930s. So-called stimulus policies also failed for Japan in 1990s. And Keynesian proposals failed for […]

[…] that being right required any keen insight. Keynesian policies failed for Hoover and Roosevelt in the 1930s. So-called stimulus policies also failed for Japan in 1990s. And Keynesian proposals failed for […]

[…] that being right required any keen insight. Keynesian policies failed for Hoover and Roosevelt in the 1930s. So-called stimulus policies also failed for Japan in 1990s. And Keynesian proposals failed for […]

[…] ago … the Democrats should have paid attention to his video posted way back in Jan 2009 (: Keynesian policies failed for Hoover and Roosevelt in the 1930s. So-called stimulus policies also failed for Japan in 1990s. And Keynesian proposals failed for […]

[…] historical record. Nations that have tried this type of “stimulus” have not fared well. Big spending increase under Hoover and Roosevelt failed in the 1930s. Japan tried several Keynesian packages and failed in the 1990s. Bush failed in 2008 and Obama […]

[…] historical record. Nations that have tried this type of “stimulus” have not fared well. Big spending increase under Hoover and Roosevelt failed in the 1930s. Japan tried several Keynesian packages and failed in the 1990s. Bush failed in 2008 and Obama […]

[…] the historical record. Nations that have tried this type of “stimulus” have not fared well. Big spending increase under Hoover and Roosevelt failed in the 1930s. Japan tried several Keynesian packages and failed in the 1990s. Bush failed in 2008 and Obama […]

[…] the historical record. Nations that have tried this type of “stimulus” have not fared well. Big spending increase under Hoover and Roosevelt failed in the 1930s. Japan tried several Keynesian packages and failed in the 1990s. Bush failed in 2008 and Obama […]

[…] that being right required any keen insight. Keynesian policies failed for Hoover and Roosevelt in the 1930s. So-called stimulus policies also failed for Japan in 1990s. And Keynesian proposals failed for […]

[…] the historical record. Nations that have tried this type of “stimulus” have not fared well. Big spending increase under Hoover and Roosevelt failed in the 1930s. Japan tried several Keynesian packages and failed in the 1990s. Bush failed in 2008 and Obama […]

[…] that Franklin Roosevelt’s New Deal was bad news for the economy. And the same can be said of Herbert Hoover’s policies, since he also expanded the burden of federal spending, raised tax rates, and increased government […]

[…] Yes, Obama has imposed a class-warfare tax hike, pushed through Obamacare, and squandered $billions on a faux stimulus (perfectly captured by this cartoon). But that’s trivial compared to the damage caused by FDR (and Hoover). […]

[…] and the net effect is economic stagnation and record debt. Going back further in time, Presidents Hoover and Roosevelt dramatically increased the burden of government spending, mostly financed with […]

[…] and the net effect is economic stagnation and record debt. Going back further in time, Presidents Hoover and Roosevelt dramatically increased the burden of government spending, mostly financed with […]

[…] perhaps explains why Keynesian economics has a long track record of failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Nixon, Ford, and Carter in the 1970s. It didn’t work […]

[…] just the tip of the stimulus iceberg. Keynesian economics has a long track record of failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Nixon, Ford, and Carter in the 1970s. It didn’t work for Japan […]

[…] just the tip of the stimulus iceberg. Keynesian economics has a long track record of failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Nixon, Ford, and Carter in the 1970s. It didn’t work for […]

[…] if the stimulus was adopted. … Keynesian economics has a long track record of failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Nixon, Ford, and Carter in the 1970s. It didn’t work for […]

If we check the official dates for our business cycles, we see that the “depression” was over when FDR took office, i.e. hit bottom in March 1933. Nobody knew it was over at the time, just as it took 14 months to learn the most recent recession had ended.

[…] of the economy, either by borrowing or taxation. This is why Keynesian spending didn’t work for Herbert Hoover and Franklin Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, or Obama in […]

[…] of the economy, either by borrowing or taxation. This is why Keynesian spending didn’t work for Herbert Hoover and Franklin Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, or Obama in […]

[…] as I had to explain when correcting Andrew Sullivan, he was a big spender. Heck, FDR’s people privately admitted that their interventionist policies were simply more of the same since Hoover already got the ball […]

[…] spending is so powerful and effective in theory, then why does it never work in reality? It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Nixon, Ford, and Carter in the 1970s. It didn’t work for […]

[…] believed that the idea was discredited because Keynesian stimulus schemes didn’t work for Hoover and Roosevelt in the 1930s. They didn’t work for Japan in the 1990s. And they didn’t work for Bush […]

[…] believed that the idea was discredited because Keynesian stimulus schemes didn’t work for Hoover and Roosevelt in the 1930s. They didn’t work for Japan in the 1990s. And they didn’t work for Bush […]

[…] also believed that the idea was discredited because Keynesian stimulus schemes didn’t work for Hoover and Roosevelt in the 1930s. They didn’t work for Japan in the 1990s. And they didn’t work for Bush or Obama […]

[…] For instance, generation after generation of American students were taught that the Great Depression was the fault of capitalism run amok. But we now have lots of evidence that bad government policy caused the Great Depression and that the downturn was made more severe and longer lasting thanks to further policy mistakes by Hoover and Roosevelt. […]

[…] For instance, generation after generation of American students were taught that the Great Depression was the fault of capitalism run amok. But we now have lots of evidence that bad government policy caused the Great Depression and that the downturn was made more severe and longer lasting thanks to further policy mistakes by Hoover and Roosevelt. […]